ARJUN ARORA,NEW DELHI vs. ITO WARD 44(6), NEW DELHI

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ITA 4569/DEL/2025Status: DisposedITAT Delhi22 December 2025AY 2017-18Bench: YOGESH KUMAR U.S. (Judicial Member), SHRI MANISH AGARWAL (Accountant Member)5 pages

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Facts

The Assessee was levied a penalty under Section 271B for failing to get accounts audited or file an audit report under Section 44AB by the due date for AY 2017-18. The Assessee filed an appeal against this penalty before the CIT(A) with a delay of 1050 days, which was dismissed by the CIT(A). The Assessee contended that the delay was due to bona fide reliance on previous counsel's advice that the penalty would be dropped once the quantum appeal was decided, as the audit report was obtained in time.

Held

The Tribunal condoned the delay of 1050 days in filing the appeal before the CIT(A), subject to the Assessee depositing Rs. 2,000/- to the Prime Minister's National Relief Fund. Crucially, the Tribunal noted that the assessment order, which formed the basis for the Section 271B penalty, had been quashed by the CIT(A) in the quantum proceedings, a decision affirmed by the Tribunal. Therefore, the penalty order under Section 271B does not survive and was deleted.

Key Issues

1. Whether there was sufficient cause to condone the 1050-day delay in filing the appeal against the penalty order before the CIT(A). 2. Whether the penalty under Section 271B survives when the underlying quantum assessment, which led to the penalty initiation, has been quashed by the appellate authorities.

Sections Cited

271B, 44AB, 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Hearing: 22/12/2025Pronounced: 22/12/2025

The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, (‘Ld. CIT(A)/NFAC’ for short), dated 26/06/2025 pertaining to Assessment Year 2017-18.

Brief facts of the case are that, penalty proceedings has been imitated against the Assessee on the ground that the Assessee failed to get accounts audited or to furnish a report of such audit as required under the provision of Section44AB of the Income Tax Act, 1961 ('Act' for short) within due date of furnishing the return of income for Assessment Year 2017-18 u/s 139(1) of the Act.

1. Accordingly, an order of penalty came to be passed u/s 271B of the Act. Aggrieved by the order of penalty dated 22/06/2021 the Assessee preferred an Appeal before the Ld. CIT(A) with a delay of 1050 days in filing the Appeal. The Appeal filed by the Assessee has been dismissed on delay in latches. The Ld. CIT(A) vide order dated 26/06/2025, dismissed the Appeal filed by the Assessee on delay in latches.

Aggrieved by the order of the Ld. CIT(A), the Assessee preferred the present Appeal.

The Ld. Departmental Representative vehemently submitted that there was no sufficient cause to condone the inordinate delay of 1050 days in filing the Appeal before the Ld. CIT(A), therefore, the Ld. CIT(A) has rightly dismissed the first appeal of the Assessee in delay in latches, thus, sought for dismissal of the present Appeal.

We have heard both the parties and perused the material available on record. Aggrieved by the penalty order dated 22/06/2021, Assessee preferred Appeal before the Ld. CIT(A) with a delay of 1050 days. As per the Assessee, the cause of the delay was that ‘The impugned order dated 22/06/2021 has been passed u/s 271B. The said order has been received on registered e-mail as on the income tax portal. The said order has been passed for the reasons that the Assessee had failed to get it accounts audited or file audit report on or before the due date. It is matter of record that the Assessee got report u/s 44AB in Form 3CB/3CD on 27/10/2017, however, it was uploaded on income tax portal on 31/03/2018 at the time of filing of return. The Assessee was under a bona-fide belief and as instructed by the counsel that the penalty would be dropped as audit report has been obtained in time on 27/10/2017, however, the same would be dropped when the quantum appeal would be decided.